See pub 525 pages 34-35 ...
If you had to repay an amount that you included in your income in an earlier year, you may be
able to deduct the amount repaid from your income for the year in which you repaid it. Or, if
the amount you repaid is more than $3,000, you may be able to take a credit against your tax for
the year in which you repaid it.
Repayment over $3,000.
If the amount you repaid was more than $3,000, you can deduct
the repayment as an other itemized deduction on Schedule A (Form 1040), line 16, if you included the income under a claim of right. This means that at the time you included the income,
it appeared that you had an unrestricted right to it. However, you can choose to take a credit for
the year of repayment. Figure your tax under both methods and compare the results. Use the
method (deduction or credit) that results in less tax.
https://www.irs.gov/pub/irs-pdf/p525.pdf
